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Singapore REITs: Performing a reality check
Our assessment of the recent performance of S-REITs show that their fundamentals have generally remained sound, and S-REITs continue to benefit from their past investments and higher secured rentals within their existing portfolios. On the capital management front, S-REITs have again stepped up their efforts to repay/refinance their borrowings ahead of their maturities and over a longer term, as well as hedge their interest rate exposure in anticipation of the potential hike in interest rates. We are retaining Suntec REIT [BUY, S$1.85 FV] and Starhill Global REIT [BUY, S$0.90 FV] as our sector picks. However, we now replace CapitaCommercial Trust with Frasers Centrepoint Trust [BUY, S$2.08 FV] as our preferred pick due to the former' s strong unit price run-up. Retain NEUTRAL on broader S-REITs sector. (OCBC S-REITs Team)
...last: $1.895...
Frasers Cpt Tr: New mall to propel growth
- Initial NPI yield at 5.43%
- Funded partially by placement
- Gearing to increase slightly to 30.3%
New addition to portfolio
Frasers Centrepoint Trust (FCT) announced that it has completed the acquisition of Changi City Point (CCP) from its sponsor' s joint venture Ascendas Frasers Pte Ltd on Mon. Recall that FCT first proposed to acquire the retail mall for a purchase consideration of S$305.0m (or S$1,472 psf NLA) on 8 Apr. According to the circular for unitholders, CCP is expected to generate an NPI yield of 5.43% and to contribute positively to DPU, assuming that the transaction is funded via a combination of debt and equity.
Strong interest for private placement
FCT has since launched a private placement of 88m new units at an issue price of between S$1.79 and S$1.835 per unit, upon getting unitholders' approval for the relatedparty transaction. We note that the issue price was later fixed at the top range of S$1.835, backed by strong demand from new and existing Asian and European institutional investors. This represents a slight 3.6% discount to the VWAP for the full market day prior to the placement announcement. The total net proceeds of S$158.7m raised from the placement exercise was used to part finance the acquisition, while the remaining balance of the purchase price was funded by borrowings and internal resources. Based on our projections, the CCP deal is expected to add an annualised 0.12 S cents to FCT' s DPU. FCT' s gearing ratio, on the other hand, is likely to increase from 27.7% as at 31 Mar to 30.3%.
Maintain BUY
In connection with the placement, FCT has also declared an advance distribution of 2.288 S cents per unit for the period of 1 Apr to 9 Jun 2014, payable on/around 17 Jul. This translates to a respectable yield of 6.4%. We now incorporate the private placement and acquisition into our forecasts. Consequently, our
fair value is raised from S$2.02
to S$2.08. Given that upside potential remains attractive, we maintain our
BUY rating on FCT.
Source: OCBC Research - 18 Jun 2014
...last:$1.855...
Technically the chart looks good for FCT.
http://mystocksinvesting.com/singapore-stocks/frasers-centrepoint-trust/frasers-centrepoint-trust-on-up-trend/
guoyanyunyan ( Date: 21-May-2014 15:56) Posted:
Frasers Cpt Tr: Foraying Into Changi
Compared to the other properties under FCT, CCP (Changi City Point) appears to be yielding at a fair rate.
Investment Merits
- Being the only shopping mall around Expo MRT station, at this juncture, CCP is essentially a retail monopoly
- Given the factors, shopper traffic is expected to grow further which will potentially have a positive impact on its rental yield
- Low weekend traffic is well-mitigated by leveraging on frequent events and exhibitions taking place at Singapore Expo
Investment Risks
- CCP' s Weighted average lease expiry standing at 1.68 with more than 80% of tenancies expiring between 2015 and 2016
- A private placement along with debt is utilised to finance CCP' s acquisition with exact details that are not finalised yet
- Potential competition from Eastpoint Mall and Project Jewel that are set to open in late 2014 and 2018 respectively
more ..last:$1.855...
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Frasers Cpt Tr: Foraying Into Changi
Compared to the other properties under FCT, CCP (Changi City Point) appears to be yielding at a fair rate.
Investment Merits
- Being the only shopping mall around Expo MRT station, at this juncture, CCP is essentially a retail monopoly
- Given the factors, shopper traffic is expected to grow further which will potentially have a positive impact on its rental yield
- Low weekend traffic is well-mitigated by leveraging on frequent events and exhibitions taking place at Singapore Expo
Investment Risks
- CCP' s Weighted average lease expiry standing at 1.68 with more than 80% of tenancies expiring between 2015 and 2016
- A private placement along with debt is utilised to finance CCP' s acquisition with exact details that are not finalised yet
- Potential competition from Eastpoint Mall and Project Jewel that are set to open in late 2014 and 2018 respectively
more ..last:$1.855...
Frasers Cpt Tr - Further details on CCP
Frasers Centrepoint Trust (FCT) issued a circular today (12/05/2014), containing further details on the acquisition of Changi City Point (CCP). Although most of the details were broadly within our expectations, the number of shares (88.2m) to be issued for the financing of the acquisition (debt-to-equity ratio of 48:52) is slightly higher than our initial forecast.
We maintain our Add rating on the back of
positive outlook for this acquisition but lower our DDM-based
target price to
S$2.13 (discount rate of 7.5%) due to the slightly higher-than-expected share dilution.
Source :
CIMB Research ...last:$1.820...
Frasers Centrepoint Trust 2QFY14 results review: resilient performance
- FCT reported 2QFY14 DPU of S¢ 2.88/unit, annualizing 6.2% and in line with JPMorgan and consensus estimates. Overall DPU was up 6.7% Y/Y from improved NPI performance (primarily at Causeway Point), coupled with a 100% payout ratio this quarter to offset weakness from refurbishment at Bedok Point. We note that the trust has retained S$2million (S¢ 0.25/unit) of distributable income to-date. Rental reversion for the quarter was strong at 9.3%, again largely driven by Causeway Point. Book value remained stable at S$1.78/unit, with gearing stable at 27.7%. The trust will trade ex-2QFY14 dividend on 28-April.
- Earnings growth back loaded due to ongoing AEIs. While overall portfolio NPI was up 2% from improved performance at Causeway Point, Bedok Mall continues to be the near-term drag due to ongoing tenant reconfiguration, with occupancy now down from 80.2% to 77%. Having said that, management expects occupancy to recover back to 95-99% post refurbishment in 2H14, which will see better earnings contributions from 4QFY14 onwards.
- Inorganic growth to be the key growth driver. The trust announced on 08-April the conditional S& P acquisition of Changi City Point for S$305million, or S$1,471psf NLA. The sponsor' s disclosure of the asset' s passing rents of S$9.08psf (as of last June) does reflect a modest level of under-renting versus typical passing rents of suburban retail malls at around S$10-12psf. Whilst no numbers have been provided, management guided for the acquisition to be funded through a combination of debt and equity. Assuming an asset yield of 5.4% and a 50-50 debt/equity funding, we estimate gearing post transaction would modestly rise from 29.7% to around 32%, with an estimated potential 2.5% accretion to our FY14E DPU estimates and a 2.7% uplift to our current NAV valuations. EGM approval will be required for this transaction.
- We retain our Neutral rating on FCT, with a Jun-14 PT of S$1.85 unchanged. Key upside risks to our rating and PT include a much stronger contribution from Causeway Point AEI and better-than-expected rental reversions. Key downside risks include the prolonged uncertainty with the sponsor.
J.P. Morgan
Frasers Centrepoint Trust: Performance to get better
- 2QFY14 DPU up 6.7% YoY
- Portfolio stable despite volatility within
- Proposed acquisition to propel growth
Consistent set of 2QFY14 results
Frasers Centrepoint Trust (FCT) reported its 2QFY14 scorecard last evening. NPI and distributable income grew by 2.0% and 1.4% YoY to S$29.3m and S$23.8m respectively. The better performance was driven mainly by higher revenue from
Causeway Point (CWP), though partially offset by higher property taxes, maintenance costs and property manager' s fees. No cash was retained during the quarter, as opposed to S$1.2m cash reserved in prior year. As such, DPU grew at a faster pace of 6.7% YoY to 2.88 S cents. This is largely within our view, given that first-half DPU of 5.38 S cents met 47.8% of our FY14F DPU (consensus: 48.9%).
Disruptions from Bedok Point portfolio steady
On first look, headline figures such as a 7.6% YoY decline in shopper traffic to 20.4m and 19.5ppt YoY drop in
Bedok Point' s occupancy to 77.0% have raised concerns. However, we understand that the fall in shopper traffic was mainly impacted by on-going refurbishment works at Bedok Point and CWP. Management projects the occupancy at Bedok Point to recover to above 95% in 2HCY14 after the lease commencement of several new tenants, which we believe will bring about improvements in occupancy and footfall. Overall, we note that portfolio occupancy has maintained steady at 96.8% (1Q: 96.7%), while rental reversions stayed robust at 9.3% (1Q: +2.5%) for the leases renewed during the quarter.
Maintain BUY with unchanged S$2.02 fair value
Looking ahead, FCT reiterated that CWP and
Northpoint are expected to underpin growth within its existing portfolio, as both malls contribute to the bulk of the lease renewals in FY14-15. As announced on 8 Apr, FCT has proposed to acquire
Changi City Point for S$305.0m. No additional colour was given on the transaction, except that FCT intends to finance it using a combination of debt and equity (via private placement), and that the deal is expected to be DPU-accretive. We view this addition as timely, as it will provide
another boost to DPU in an otherwise moderating growth portfolio. Maintain
BUY with unchanged
S$2.02 fair value on FCT.
Source:
OCBC Research ...last:$1.820...
